10/09/2008

Pac Man Jones, the Cowboy corner with a record of at least six arrests including a couple of "witness to murders" was thrown out of the league as punishment "pending further review." He promised, he pleaded, he said he had changed and was even willing to change even more if he was allowed to play again. So a year in exile with no provable arrests the League relented and allowed him back into the league....IF. If he stayed out of trouble, out of the accursed strip clubs where naked women made him violent, and out of any and all fights both with and without weapons. But after a year he is a bad boy once again. He tried to beat up his bodyguard while the poor guy was doing what is normal when poised above a urinal in a Mens room. The guy retaliated and cops were called. Will poor Pac Man be allowed to play? Stay tuned.

Which brings me to the latest "crises" on Wall Street. This follows the Nobel Prize winners that set up Long Term Capital Management whose main claim to fame was to tell customers it was none of their business if they asked what the genius class was doing. LTCM was "earning" the largest returns Wall Street had ever seen. Then..those trades that were "none of anyone's business" started going south. It turned out that all the algorithms, defecation studies, and continually adjusting computer programs had failed. Wall Street begged for a chance to redeem itself. It promised to stay clear of the strip clubs, bars, and churches if only they got another chance. So just like Pac Man they got another chance, again.

Valuing assets according to models instead of their market price--which, since there was no market to value anything to, couldn't be valued exactly. And besides, nosy regulators and even nosier clients sticking their noses in would disturb the market thus destroying strategies and profits. So discovering the real price would be impossible and the band played on. Til Long Term Capital Market times were here again. Suddenly this and that "model" went wrong and margin calls cascaded down the well traveled pike. The resulting near destruction of world markets by these advanced degree pricks was a "lesson" to everyone, again: do not to ever ever invest in a "black box" investment scheme, again. Looking back, it seems as if "the street" has been victimizing us in a sort of alternate year spectacle from the beginning of investing. And they have.

It started with the first hustle: a guy named Bill Duer used his closeness with Alexander Hamilton (or was it Benedict Arnold?) to float a phony bond scheme back in 1792. His reward? They ran him out of town, almost beat him to death, and he died in debtors prison three years later. But schemes and frauds turned up every few years or so, promises were made, and everybody went back to work. Pac Men all.

Unfortunately we don't have debtors prisons any more so the current band of "borrowers" will either be beaten to death with soggy Ivy League diplomas (all MBA naturally) or end up disgraced, reduced to living on the Hamptons or Monaco with only two maids and ten year subscriptions to the Wall Street Journal.

This time, once again Wall Street just couldn't stay out of the strip clubs. They just had to show us all how much better than us they were. Trophy wives, million dollar cars, six houses stocked with mistresses, and TV appearances on a business channel where they told us "how to do it and do it now."

Well, they did it this time. This time Wall Street had the biggest band of thieves this side of the Costa Rican street gang, MS 13. There is a view that street thugs might be cleaner than Wall Street; at least the street gangs rob us without any phony middlemen getting a piece. Free Enterprise has been twisted and destroyed by a horde of Armani clad barbarians with advanced educations from all the "best" universities. Guys who used their superior intelligence to dazzle us and then sodomize us. The lineup we all remember would include World Com, the S&L-Keating Five (we had to rescue every savings and loan in the southwest on that one), Ivan Boesky who used inside info to build an illegal fortune of 100million; Jay Gould ("the Mephistopheles of Wall Street"), Enron, and lately the Masters of the Universe types too numerous to mention. Even worse is that they are all smarter than us. Everyone has at least one advanced degree in everything from finance to nuclear science and they proceeded to use their big fat brains to rape the world with impossible to understand and unregulated "off the book" transactions that nobody can begin to fathom. And to top it all off? They sold misrepresented insurance on these black box assets, insurance that was backed by an insurance company with no money to pay claims should they arise. The people they already screwed were conned into buying insurance from uncapitalized companies on assets that didn't exist.

After all this, with the biggest banks in the world looted, some of the biggest companies in the world teetering on collapse, and even some countries seeking financial help will we keep capitalism, a system that with all its faults has created more wealth for more people than any system in history?

This time it seems like everyone we trusted, from our governments to the captains of business, has lied to us while robbing us blind and laughing at us. "We need a new system," is the cry in the land, but the only ones available are fascism, the equally failed socialism, or some bastard hybrid that is sure to keep the crooks in power, only this time behind a wall of laws and regulations that nobody will ever penetrate.

Right now, with no alternative available, we are patching up some of the holes so we can stay afloat, but for how long this time? Marching a bunch of sorry politicians and hedge fund managers off to prison ain't gunna save us.

But prison terms might make us feel just a little bit better. In the meantime let's just send the Pac Man capitalists to their rooms with no TV for a week.